Washington holds exciting possibilities for determined cannabis entrepreneurs, but the process can be complicated because you must stay updated with the constantly changing regulations.

By 2024, Washington hit an impressive milestone, selling $600 million worth of legal cannabis in just six months. 

With the cannabis industry thriving like never before, how can you open a cannabis dispensary in Washington?

Once you get your Washington cannabis license, you can start working on opening your cannabis dispensary in Washington.

In this post, we'll provide the blueprints and simplify the process of opening a cannabis dispensary in Washington.

Keep reading to understand the process.

Overview of Cannabis Laws in Washington 

In 2012, Washington became the second US state to legalize recreational cannabis after Colorado, with the Washington State Liquor and Cannabis Board (LCB) taking over the responsibility for all cannabis licensing and regulation.

However, for the time being, Washington has placed a moratorium on issuing new cannabis licenses. This means that the only way to get a license is to purchase one from an existing license holder. After finding a potential seller, you will also need approval from WSLCB. The state will review your criminal history and require proof that you’ve lived in Washington for at least six months before applying, and only then will the transaction occur.

Additionally, a cannabis retailer licensee can only sell marijuana to adults who are 21 years and above. Cannabis retailers can also apply for medical marijuana endorsement so that they can sell marijuana to patients, but they will have to fulfil specific requirements to achieve this endorsement, such as having a copy of the Department of Health (DOH) certificate for the medical consultant on board.

Read More: How to Get a Cannabis License in Washington. 

Understand State’s Compliance Regulations

The WSLCB has a separate division called the Enforcement and Education Division responsible for ensuring that cannabis laws and regulations are being followed by businesses and customers. 

The compliance requirements for cannabis businesses in this state can be strict, but it’s mandatory to follow them, including, 

• Dispensary locations should be at least 1000 feet from schools, playgrounds, and other places mentioned below
• Have CCTV cameras that work 24/7
• Fill all their inventory and sales data on the Cannabis Central Reporting System (CCRS)
• Have an insurance certificate 
• Update any changes made to your dispensary 

Remember that failure to follow the rules and regulations in Washington can result in heavy fines and even the closure of your business.

Types of Licenses Available in Washington

The Washington State Liquor and Cannabis Board allows residents to apply for four types of cannabis licenses:

Cannabis Research License

This license allows you to produce, process, and possess cannabis for research purposes, based on the rules in RCW 69.50.372.

Cannabis Transportation License

A cannabis transportation license in Washington allows you to move or deliver cannabis related products between licensed cannabis businesses within the state.

Cannabis Retailer License

A cannabis retailer license permits the sale of usable cannabis products, cannabis paraphernalia, and lockable storage boxes.  

Cannabis Producer/ Processor License

A cannabis producer license allows the holder to cultivate, harvest, trim, dry, cure, and package cannabis for wholesale distribution to licensed cannabis processors and other producers. Additionally, they can sell cannabis plants, seeds, and plant tissue culture to other licensed cannabis producers. The licensee can sell immature cannabis plants, clones, and seeds to registered cooperative members, qualifying patients, designated providers, or licensed cannabis researchers.

Create a Business Plan

The first step for anyone who plans to open a cannabis dispensary in Washington is to make a business plan. This plan is vital for the success of your business and is also a requirement by the State of Washington for anyone applying for a license. 

Here are some of the major things your business plan should include:

• Company description
• Location
• Product and services
• Target market
• Staff Requirements 
• Competitor analysis
• Compliance and security
• Funding plans
• Marketing and sales plan
• Technology plan
• Insurance provider

Secure Financing

Traditional banks do not finance dispensaries in Washington due to federal cannabis laws and banking regulations, but other funding options exist. 

One of the best options is seeking out angel investors or venture capitalists. These investors can offer more than just money, as they often bring valuable business connections and industry expertise. However, you may have to give up equity.

Another option is finding a financial institution to fund your cannabis business. While they charge higher interest rates than traditional banks, they allow you to keep full ownership of your business.

Applicants for a cannabis retailer license can also qualify for financial and technical support through Washington's Social Equity Program. This initiative aims to help individuals from communities disproportionately affected by past cannabis laws enter the industry successfully.

Find a Suitable Location

According to RCW 69.50.331(8), licensed cannabis producers, processors, and retailers must be at least 1,000 feet away from certain locations. These include:  

• Public parks  
• Elementary or secondary schools  
• Libraries
• Playgrounds  
• Child care centers  
• Recreation centers or facilities  
• Game arcades (if they allow anyone under 21)  
• Public transit centers   

Nevertheless, local municipalities have been given the freedom to change this law, reduce the buffer zone distance, or limit the number of dispensaries under their jurisdiction. They can even prohibit cannabis dispensaries from operating.

Besides following the municipality’s rules and regulations regarding the location of your dispensary, you must also consider other factors when finalizing the location, such as its size, how easily accessible it will be to consumers, and the parking size that comes with it.

Apply for a Cannabis Dispensary License

The steps to applying for a cannabis dispensary license have been listed below:

• If you're forming an LLC or corporation, you’ll need to register with the Washington Secretary of State’s Office.
• Check with the local municipality to obtain necessary permits for your dispensary location.
• Submit your cannabis retailer license application as directed by the WSLCB, which is typically done by mail.
• Once the LCB receives your application, they will reach out with an email. This email will contain the name and contact information of the licensing specialist who will be looking after your application.
• The licensing specialist will then contact you within two working days and schedule a phone interview. After that, you will be sent an email containing electronic copies of all the necessary forms and a list of the documents you need to submit along with them.
• The WSLCB will review all the information gathered during the application process and then decide whether to approve or deny the dispensary license. If approved, you will receive an electronic billing statement with instructions on how to pay the required licensing fee.
• Once you have paid the licensing fee, you will receive an approval letter from WSLCB. This approval letter will also be your temporary 30-day cannabis license. The DOR Business Licensing Service will issue your cannabis business license within these 30 days.

Documents Required to Apply for a Cannabis Dispensary License 

Ensure that you have all the following necessary documents required to complete your application:

• Business plan
• Day to Day Operational plan
• Floor plan
• Financial statements/source of funds
• Purchase agreements
• Lease information
• Fingerprint cards
• Personal criminal history statement
• Copy of approved identification
• Copy of tax returns and/or bank statements

Application Review and Compliance

Once your application has been submitted, a licensing specialist from the LCB will contact you and guide you through the rest of the process so that you can successfully open a cannabis dispensary in the state.

Here are the key requirements you must fulfil for your application to be accepted:

• Phone Interview and Documentation 
• Floor Plans
• Operating Plans 
• Criminal History Background Check 
• Local Authority Notification 
• Final Inspections 
• Insurance Certificate 
• Briefing 
• License Approval or Denial 

Costs Associated with the Application Process

Build Your Team

The next step is to focus on building the core team of your dispensary. You'll need skilled and reliable staff to keep things running smoothly and ensure a great customer experience. Here are the key roles to fill:

• Manager
• Receptionist 
• Budtenders or Cannabis Sales Associates
• Security personnel
• Inventory/Compliance Manager

Design and Set Up Your Dispensary

A good location and team is not enough for a successful cannabis business. You must also focus on the design of your dispensary and ensure that it creates a welcoming atmosphere for customers. 

Some of the key factors to look into when designing your dispensary include:

• Customer Flow: Design the dispensary in such a way that customers can move around easily.
• Payment Options: Ensure that you provide customers with multiple and convenient payment options including terminals, handheld devices, and self service kiosks.
• Product Display: Make sure to highlight your best products by keeping them on the front shelves with clear, attractive displays.
• Branding: Spend some money on strong branding to give your business a unique and memorable identity. Make sure to use your brand’s colors, logos, and design elements consistently to stand out.
• Security: Ensure that you have top-notch security by keeping entrances secure with security personnel and cctv cameras. 
• Restrooms: Maintain accessible and well-kept restrooms for both customers and staff.

Develop Marketing and Sales Strategies

There is a lot of competition when it comes to the cannabis market in Washington State as there are more than 500 operational dispensaries. Hence, you will have to put in some effort to make your dispensary stand out and attract the maximum number of customers.

Here are some tried and tested tips which will help your business reach the target market:

• Social Media- Focus on growing your social media presence by regularly posting on your business’s social media account. 
• Optimise for Local SEO- Keep updating your Google Business profile with all the latest information while using local SEO so that your webpage lands in the top searches on Google. Try to make your website user friendly and provide all the key details regarding the cannabis products you sell.
• Marketing and Rewards- Keep your customers coming back by offering loyalty programs, coupons or discount codes on shopping for a certain amount. You can also organise events every time you reach a milestone to celebrate with your customers and let them know how much you value them.

Insurance Considerations for Cannabis Dispensaries

In Washington, cannabis retailer licensees are required to have commercial general liability insurance with a minimum coverage of $1 million. This insurance protects business owners against legal claims from customers or third parties, covering common risks such as customer injuries, property damage, or advertising-related issues.

Before the Washington State Liquor and Cannabis Board issues a dispensary license, applicants must provide proof of insurance. This means that they must submit an insurance certificate at the final stage of the application process.  Moreover, this insurance must be purchased from a provider authorized to operate in Washington with a rating of at least A - Class VII. The insurance policy must be in the applicant entity’s name and specifically reference the proposed dispensary location.

Other than the general liability insurance policy, there are a few other insurance policies that anyone who is planning to open a cannabis dispensary in Washington should consider. These include:

• Product Liability Insurance- This policy covers the cost of any harm or injury that occurs due to the products you are selling.
• Commercial Property Insurance- This policy covers the cost of any loss or damage that occurs to the dispensary property.
• Workers' Compensation Insurance- This protects all the staff and covers any expenses or losses endured by them due to a work related injury.
  
  • Washington is a monopolistic state meaning that companies have to purchase workers compensation from the state fund. Private insurers can not write workers compensation policies in Washington. 

Navigating Common Challenges for Success

Keeping in mind the tough competition, financial struggles and strict regulations, opening a cannabis dispensary in Washington can be a challenging journey. So, we’ve put together some common problems businesses face to help you navigate the industry, along with solutions to overcome them.

Banking and Financial Challenges

Since cannabis is still a Schedule I substance, most banks are hesitant to work with cannabis businesses. 
To navigate this challenge, it's best to consult experts in cannabis finance and legal matters. They can help you find cannabis-friendly banks or credit unions that offer banking solutions tailored to the industry.

Frequent Policy Changes

State and local authorities often update cannabis regulations and these changes often affect everything from licensing requirements to product labeling and taxation. These constant changes can be overwhelming for dispensary owners trying to stay compliant.

The best way to stay ahead is by subscribing to official government updates, joining industry associations, and consulting with legal experts who specialize in cannabis regulations. Additionally, regularly training your staff on new compliance requirements ensures your business remains up to date and avoids costly violations.

Consolidation and Competition

With the cannabis industry growing rapidly, competition is getting tougher, and it is becoming exceptionally hard for small businesses to survive. 

You’ll need a smart strategy that makes your dispensary stand out to stay ahead. Introduce unique and good quality products at reasonable prices, provide extraordinary customer service, and try to create a strong brand identity.

End Note

Running a cannabis dispensary comes with complex regulations, and staying compliant is crucial. That’s where Frontier Risk steps in.

We offer tailored insurance solutions designed for cannabis businesses, helping you stay protected, informed, and ahead of legal changes. Let us handle the risks so you can focus on growing your dispensary.

Request a quote today and discover how Frontier Risk can secure your business’s future!

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